The Point of Taxation Rules, 2011 determine when service tax becomes payable and the applicable tax rate. Key points include: - Service tax is payable at the earlier of the date of invoice or date of payment. - For continuous supply of services, each completion event or periodic payment date determines the point of taxation. - If the effective tax rate changes, the point of taxation will be the earlier of the date of invoice or date of payment. - For new taxable services, service tax may not be payable if payment was received or invoice issued before the service became taxable.

1. Point of Taxation Rules, 2011
Introduction
 Point of Taxation [POT] Rules, 2011, came into force from 1st April, 2011, vide
notification no. 18/2011-ST [GSR 175(E)] dated 1st March, 2011.
 Effectively applicable from 1st April, 2011 or 1st July, 2011, at the option of service
provider.
 Introduced with the object to prepone revenues Government and to bring in
harmony with other Indirect Tax Laws.
 Introduction of Point of Taxation is a step by government to move towards GST
Regime.
 The Purpose of Point of Taxation is to set out as to when service tax is payable by
the service provider and to determine the effective rate of service tax.
Important Terminologies.
 Point of Taxation means the point in time when a service is deemed to have been
provided.
 Associated Enterprises shall have the same meaning assigned to it in section 92A of
the Income Tax Act, 1961.(International Transactions)
 Continuous Supply of Service means any service which is provided, or to be provided
continuously, under a contract, for a period exceeding 3 months, or those services
which the Central Government vide a notification deems as being of continuous
supply in nature.
Continuous Supply services notified by the Government vide Notification No.
28/2011-ST dated 1st April, 2011, are as follows:
i. Telecommunication
ii. Internet Telecommunication
iii. Commercial or Industrial Construction
iv. Construction of Complex
v. Works Contract
 Date of payment – Date of recording or date of credit in Bank, whichever is earlier
(Rule 2A).
For the purpose of these rules, “date of payment” shall be earlier of –
 Date on which the payment is entered in the books of account or
 Date on which payment is credited to the bank account of the person liable
to pay tax.
However, Date of payment = Date on which payment is credited to the bank
account, when the credit in the bank account is after 4 working days from the
date when there is change in effective rate of tax or a service is taxed for the first
time and the payment is made by way of an instrument which is credited to a
bank account.

2.  Change in the effective rate of tax shall include a change in the portion of value on
which tax is payable in terms of a notification issued in the official gazette under the
provisions of the Act, or rules made thereunder.
Thus, it would cover –
 Change in rate of tax
 Grant or withdrawal, etc of exemption
 Change in rate of abatement (viz., deduction from value)
 Change in rate of service tax under composition schemes under Rule 6 of
Service Tax Rules, 1994.
Determination of Point of Taxation (Rule 3)
Point of Taxation of Service Tax shall be the earliest of (a) or (b) given below:
(a) Date of issue of Invoice; or
Date of completion of Service; (in case, where the invoice is not issued within the
specified in Rule 4A of Service Tax Rules, 1994,i.e. within 30 days of completion of
service).
(b) Date of receipt of payment towards the service. (to the extent of payment
received)
Some Special Cases:
1. Receipt of Advance
POT = Each date of receipt of advance
Wherever any advance by whatever name
known, is received by the service provider
towards the provision of the taxable service,
the point of taxation shall be the date of
receipt of each such advance.

3. 2. Continuous supply of service, Date of
completion = Periodical date of Payment.
In case of Continuous supply of service-
 Where the provision of the whole or
part of the service is determined
periodically on the completion of an
event in terms of a contract, which
requires the receiver of service to
make any payment to service
provider.
 The date of completion of each such
event as specified in the contract
shall be deemed to be the date of
completion of provision of service.
3. In case of advance of upto Rs. 1000, POT
may be opted to be the date of invoice**
Wherever the provider of taxable service
receives a payment upto Rs. 1000 in excess
of the amount indicated in the invoice, the
point of taxation –
 to the extent of such excess amount,
 at the option of the provider of
taxable service,
 shall be determined in accordance
with the provisions of (a) above.
** In this case, as per Rule 4A of ST Rules, 1994, invoice is to be issued after 30 days of
completion of provision of service; instead of issuing within 30 days from the receipt of
advance.
 Receipt by agent of the service provider is receipt by service provider himself
(Circular No.155/6/2012-ST, dated 9th April, 2012.)
 Further, in case the taxable service gets covered in the definition of continuous
supply of service and the terms of the contract recognizes the completion of service
in stages, then each such stage is deemed to be the date of completion of service
(Rule 6).
Eg: Running bills provided by the service provider under a construction contract.
Determination of Point of Taxation in case of change in effective rate of tax (Rule 4)
Rule 4
Date of completion of
provision of service
(DoS) is
Date of
Invoice
(DoI) is
Date of
Payment
(DoP) is
Then, POT is
(a)(i) Before C After C After C
Date of Payment or Date of
Invoice, whichever is earlier
(a)(ii) Before C Before C After C Date of Invoice
(a)(iii) Before C After C Before C Date of Payment
(b)(i) After C Before C After C Date of Payment
(b)(ii) After C Before C Before C
Date of Payment or Date of
Invoice, whichever is earlier
(b)(iii) After C After C Before C Date of Invoice
C= Date of Change in effective rate of tax.

4. Chart to remember the provision easily.
POT
Service Provided Before C Service Provided After C
DoI- After C DoI- Before C DoI- After C DoI- Before C DoI- Before C DoI-After C
DoP- After C DoP- After C DoP- Before C DoP- Before C DoP- After C DoP-Before C
Whichever DoI DoP Whichever DoP DoI
is earlier is earlier
Earlier of DoI and DoP Later of DoI and DoP
Determination of Point of Taxation in case new services (Rule 5)
Where a service is taxed for the first time (i.e. first time service become taxable), then-
(a) No tax shall be payable to the extent the invoice has been issued and the payment
received against such invoice before such service became taxable.
(b) No tax shall be payable is the payment has been received before the service becomes
taxable and invoice has been issued within 14 days of the date when the service is taxed
for the first time.

5. Chart
Service Tax
Will NOT be charged Will be charged
Payment Recd Payment Recd Payment Recd Payment Recd
before levy before levy after levy before levy
AND AND BUT
Invoice raised Invoice raised Invoice raised
before leve after levy but after 14 days of
within 14 days of levy
levy
Determination of Point of Taxation in case of specified services or persons (Rule 7)
 Point of Taxation in case of Reverse Charge.
The point of taxation in respect of the persons required to pay tax as recipients of service
in respect of services notified under sub-section 68(2) of the Finance Act, 1994, shall be
the date on which payment is made.
However, if the payment is not made within a period of six months of the date of invoice,
the point of taxation shall be determined as if rule 7 does not exist. (Rule 3 will apply).
 Point of Taxation in case of Associated Enterprises.
Second provisio to rule 7 says, where the person providing the service located outside
India, the point of taxation shall be the date of debit in the books of account of the
person receiving the service or date of making the payment which is earlier.
Determination of Point of Taxation in case of copyrights, etc (Rule 8)
In respect of royalties and payments pertaining to copyrights, trademarks, designs or patents,
where –
 The whole amount of the consideration for the provision of service is not
ascertainable at the time when service was performed, and
 Subsequently the use of the benefit if these services by a person other than the
provider (i.e. Service receiver) gives rise to any payment of consideration,
The service shall be treated as having been provided each time whn a
 Payment in respect of such use or the benefit is received by the provider in
respect thereof, or

6.  An invoice is issued by the provider,
whichever is earlier.
Determination of Point of Taxation in other cases (Rule 8A)(Inserted by Finance Act 2012)
(Best Judgement Assessment of Point of Taxation)
Where the point of taxation cannot be determined as per POT Rules, 2011 as-
 The date of invoice or
 The date of payment or
 Both
are not available,
The Central Excise officer-
 May, require the concerned person to produce such accounts, documents or other
evidence as he may deem necessary
 and after taking into account such material and the effective rate of tax prevalent at
different points of time, shall, by an order in writing, after giving an opportunity of
being heard, determine the point of taxation to the best of his judgement.
Transitional Provisions (Rule 9)
Nothing contained in these rules shall be applicable,-
(i) where the provision of service is completed or
(ii) where the invoices are issued prior to the date on which these rules come into force
Provided that services for which provision is completed on or before 30th day of June, 2011 or
where the invoices are issued upto the 39th day of June, 2011, the point of taxation, shall, at
the option of the taxpayer, be the date on which the payment is received or made as the case
may be.
Section 67A v. POT Rules
Section 67A provides that rate of service tax, shall be the rate of service tax in force or as
applicable at the time when the taxable service has been provided or agreed to be provided
Contrary thereto, Point of Taxation Rules, 2011 refer to date of raising invoice, and date of
payment also for determining applicable rate of service.
In this context the definition of Point of Taxation contained in Rule 2(e) of the Point of Taxation
Rules, 2011 is relevant, which defines that ‘Point of taxation’ means the point in time when a
service shall be deemed to have been provided.
Thus, if Point of taxation of a service is on 1st August, 2012 (as per POT Rules, 2011), then-
 such service shall be deemed to have been provided on 1st August, 2012; and
 as per section 67A, rate of service tax prevalent on that date shall be applicable.